Mukesh Ambani’s Meet with PM Surprises Media

November 24th, 2011: Mukesh Ambani, Chairman and Managing Director of India’s largest private sector conglomerate, Reliance Industries Limited surprised the media when he stepped out of Prime Minister, Manmohan Singh’s office. His presence in the Prime Minister’s office in Parliament was not known till after the end of his meeting with Manmohan Singh. When questioned about the details of the meeting, Mukesh Ambani commented,” I met him just like that.”

The meeting coincides with Oil Ministry’s flak about the steep fall in output from the east coast KG-D6 gas field, the largest gas field in India. The Oil Ministry had expressed reservations about some of RIL’s expenditure on its flagging KG-D6 gas fields. On November 22nd, Petroleum Secretary, Mr. G. C Chaturvedi said that in the next three to four weeks, the Petroleum Ministry will announce its plan of action regarding the gas output. However, it is uncertain if Mukesh Ambani indeed raised this issue in his discussion with the PM. The company’s spokesperson has refused to comment on the meeting.

The Petroleum Ministry is currently calculating the amount of expenditure they will disallow to penalize RIL’s fall in output from KG-D6 fields. The Ministry has also received views from the law ministry on this issue and is scrutinizing it. Though the law ministry has not quoted any amount, sources from the petroleum ministry say that an approximate of $1.85 billion (Rs 9,600 crore) out of the $5.69 billion (Rs 29,600 crore) investment in the facilities may be disallowed.

Reliance currently produces 42 mmscmd from the gas fields against 60 mmscmd achieved earlier and opposing the promised 80 mmscmd as per the development plan. Reliance is trying to increase the output from D-1 and D-3 gas-fields in the block. The operator has been suggesting that the only solution to bring the currently producing gas-fields to production is to develop satellite fields around them.

The timing of Mukesh Ambani’s visit is interesting and could earn RIL stronger leverage within the government. In its responsibility as the nation’s largest fuel supplier, favorable solutions will be surely worked out with the government as a whole and the oil ministry specifically.

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